Election Uncertainty Is Causing Distress In The Market
How strong is the market right now?
With Election Day right around the corner and the country undergoing a global pandemic, the market has seen a great deal of volatility. Investors are on the edge of their seats amidst the uncertainty of this election; however, this is very normal. In the past election years, the market responded exactly the same way. It is true that Republican policies are more market-friendly than the Democratic policies, but does that really affect your money in the long-run?
The simple answer is no. Your money is more than likely safe if you plan on liquefying it 10-20 years down the line. As seen in the NASDAQ chart, dating from 1980, our country has displayed a positive growth regardless of the political party in office.
On the flip side, there could be a drastic impact on some sectors in the short-term. If Biden's Gren New Deal were to get passed, you could expect a massive plummet in your non-renewable energy holdings. This would include oil, mining, coal, and many more. A legislation like this is hard to revert as well, so this might result in the elimination of these sectors for our country. However, this would open up doors for renewable energy sources. Infrastructure, clean energy, and health-care services companies would be poised to do well.
Biden and the Democratic Party have hinted at a hefty corporate tax, but that is very unlikely because of the pandemic. Hopefully, the tech sector doesn't take a big hit in the short-run.
As previously stated, a Republican Party in office is more market-friendly. We have also observed this in the last four years of Trump's Presidency. If he were to get elected again we would expect the economy and the stock market to boom. Focusing on the tech sector, which offers a 15% to 25% annual return, would only continue its bullish trend. In addition, Trump's mission to sever ties with China will only result in the increase of jobs for fellow Americans. With a stronger economy, comes a stronger market.
Overall, in the short-run here could be some drastic changes to your holdings, but there is no need to panic. The reason for this volatility is the constant trading from large investors and firms. These people need to make money fast and their trades are what really influence the market. In the long-run, your holdings are more than likely safe and will not be greatly affected by the outcome of the election.